The Melbourne Merivale Playbook

On Justin Hemmes and the looming mega-group coup.

Image: Louis Douvis, AFR

Easter greetings from the offices of the Bureau of Eating & Drinking, by which I mean my couch, as I put away yet another Tony’s Chocolonely Easter egg. I trust you’ve had a restful, quiet weekend, and enjoyed a hot cross bun or two. Today I’m bringing you an unaired piece of laundry from the Bureau archive, on one of the most consequential and controversial figures in Australian hospitality history: Justin Hemmes. Think of this as your primer on Hemmes, Merivale, and a little informed speculation about how the group will go about its Melbourne expansion. Enjoy the rest of your Easter, and we shall return later in the week.

---

It’s Justin Hemmes' world, we just dine in it. The Great Gatsby of Vaucluse has Sydney’s hospitality industry in his linen clad grip. With the billionaire entrepreneur now setting his sights on a Victorian expansion, how will Merivale approach Melbourne?

What is Merivale?

The jewel in the crown of the Hemmes family, Merivale is a privately held company with interests in property, entertainment and hospitality, helmed by CEO Justin Hemmes. The backbone of the Hemmes’ empire, and what makes Merivale so impervious to the standard market fluctuations of hospitality, is the fact that he is his own landlord. In 2023, Merivale’s value swelled to over $3 Billion, largely on the back of its property portfolio. There has never been a hospitality entity of this scale set its sights on Melbourne, and local restaurateurs are right to be concerned about their market share. The Melbourne dining scene will change forever once Merivale arrives.

But all is not well at Merivale. In March, the company agreed to pay out $18 million to settle an underpayment class action case. While initial claims speculated that Merivale had underpaid up to 14,000 employees by $129 million, Merivale strongly denies any fault. The payout, almost half of which pertains to legal fees, brings to an end four years of litigation. Similarly, Merivale’s increased focus on poker machines has attracted criticism; the group holds 380 gaming machine licences, constituting up to 10% of Merivale’s revenue. Yet in spite of its detractors, Merivale remains one of the most awarded and beloved restaurant groups in Australia, operating close to 100 venues, mostly across NSW.

Landing in Lorne

Hemmes’ first foray into Victoria was a strategic one, investing in the historic Lorne hotel, and its wealthy clientele. It was surprising nonetheless when Merivale opted to infuse the site with one of the group’s entry level concepts, the raucously popular Totti’s. 

The Totti’s brand is perhaps the one most synonymous with Merivale. The decision to bring this concept to Lorne showed the group’s canny understanding of consumer spending, and the need to provide a versatile offering. With a flexible price point and a versatile menu built around antipasti and the brand’s signature puffy flatbread, Totti’s has amassed a cult-like following, and its share of controversies too. In 2021, as Sydney’s COVID19 lockdown was ending, prime opening week reservations for Totti’s Bondi were being sold online for hundreds of dollars. More recently, a daring Parisian doppelganger liked the Totti’s brand so much they decided to just flat out steal it. While they say that imitation is the best form of flattery, I suspect Hemmes’ considerable legal armada have been in contact. 

Moving in on Melbourne

While Totti’s Lorne flourishes, it has now been almost three years since news broke of Hemmes’ first Melbourne CBD investment, the seven level Tomasetti House on Flinders Lane, and we are none the wiser on Merivale’s plans for the site. Work on the Tomasetti House’s million dollar renovation has yet to begin, but there are a few clues as to what the vision may be. 

In 2022, Jowett Yu, who previously led Mr. Wong and Ms. G’s for Merivale, was announced as the executive chef for the Tomasetti House project. While it is not confirmed, and Merivale are famously tight-lipped about their creative strategies, the appointment of Yu seems to suggest that at least one of Tomasetti House’s venues will pursue the luxe Canto fare of Mr. Wong.

Looking at the deep brown brick arches that line the laneways around Tomasetti House, it's hard not to be reminded of Mr. Wong. The stripped out basement that once housed The Mill House opens nicely from street level; it's the perfect floor plan to replicate Mr Wong’s opulent opium den warehouse aesthetic. Were Mr Wong to lead Merivale’s charge into Melbourne, it would be an incredibly impactful opening gambit. Mr Wong is one of the most salubrious celebrity hotspots in Sydney, and would instantly become a top Melbourne power lunch hotspot.  Hemmes is known to strategically group his venus together in precincts, maximising the versatility of his offerings. A precinct similar to Sydney’s Ivy, utilising Tomasetti House’s multiple levels, basement and rooftop to incorporate multiple dining concepts and perhaps a hotel, is a viable option for this site.

A Tale of Two Building Sites

Merivale added the Meyers Place building Kantay House to its Melbourne portfolio last year. While speculation abounds that Hemmes plans to build into airspace to construct a Paris End pleasure palace, there is the tricky issue of Kantay House’s existing tenants, namely the revered Argentian steakhouse San Telmo and iconic late night favourite Lily Blacks. While both businesses will hopefully continue, it would be a dramatic shift in policy for Hemmes to suddenly become interested in tenancy, and I expect both venues will be looking for a new home in the coming years.

As far as Kantay House concepts go, the obvious play would be to inject the Totti’s brand into this site, but there is a delicate balance to be met here between appealing to fans of Totti’s, and appealing to the Melburnian diner. Melburnians have discerning tastes, and are more likely to seek out smaller, independent operations. Would another branch of Totti’s be embraced by Melbourne, a city already brimming with smart casual Italian options? While Merivale’s initial foray into Victoria has been a success, capturing the imagination of inner Melbourne, particularly during a cost of living crisis, is another challenge entirely.

---